When we talk to domestic fintech companies and ask them about international expansion the response most often is that they see the opportunity so great here in the US that they are not looking to expand overseas. There have been a few exceptions of course, with companies opening offices in countries where there are less barriers to entry like Canada, the UK or Australia. The latest announcement from Kabbage breaks that mold as they have expanded their small business lending operation to India. To our knowledge Kabbage is the first US-based lender to enter the Indian market.
Kabbage has opened an office in Bengaluru (formerly Bangalore) and plans to have 125 employees by year end. For comparison, the company has about 350 employees in their Atlanta headquarters. Kabbage co-founder and CEO Rob Frohwein gave us a glimpse of the team and office last week in a LinkedIn post.
According to a Business Standard article, the India team is operating as a captive technology unit for now and is still waiting to officially begin offering small business loans in India.
Frohwein told Business Standard:
We love the market…but there are certain things that you need to ensure when you go in. One is to obviously get a full feel of the landscape. You have to understand the regulatory makeup which includes understanding the non-banking financial company (NBFC) makeup.
Frohwein also shared that there are only two markets that Kabbage is looking at and India was one of them. He is aware of the challenges they will face in both acquiring and servicing their customers and that they need to find partners to leverage data in order to officially enter the Indian market. This has been Kabbage’s key to success here in the US.
There are many things working in Kabbage’s favor as the Central Bank is looking to modernize the country. One of the most well known initiatives is Aadhaar, a universal identification system. Once Kabbage is able to officially launch they still will face competition from Indian based companies such as Lendingkart, Capital Float and Flexiloans.
Conclusion
Kabbage is one of the great fintech success stories here in the US and it’s going to be interesting to see if they can do the same in a very different market. While some fintech companies are operating in multiple countries it is rare to see anyone operating at scale across geographies. Kabbage has raised a huge amount of money, close to $500 million in equity to date, so they are well positioned as they move forward with their plans.
